HIStalk Connect Interviews Rajiv Kumar, MD, Founder and CEO, ShapeUp

Rajiv Kumar, MD is founder and CEO of ShapeUp.

10-8-2013 7-56-57 AM

What is ShapeUp?

ShapeUp is a corporate wellness platform that represents the next generation of employee wellness. We leverage consumer engagement techniques — including social networking, social gaming, mobile technology, and behavioral economics-based rewards — to drive high levels of engagement and measurable results in corporate wellness programs run by Fortune 500 companies as well as small and medium-sized businesses.

 

I’m assuming you help large corporations manage their employee benefits and health, provide incentives, and offer easy ways for the employees to track their fitness, like with Jawbone and Fitbit. What else?

Yes, that’s the general idea. We have a software platform that we license to corporations. They use this as the central hub of engagement for their wellness programs. Most of our clients, when we begin working with them, already have an existing wellness program. It may consist of traditional components, like a health assessment, an annual biometrics screening, physical activity programs, telephonic coaching to help people with managing their lifestyle, and so forth. 

We provide a platform where employees can sign up, engage with their colleagues, and participate in activities. We run challenges and different types of social games, and we can also link people directly to a health assessment or to their biometric screening results. The coaching can happen on our platform as opposed to telephonically.

Employees can also engage in the platform with their mobile device through our mobile app. They can set goals for physical activity, weight loss, nutrition and stress management, track their status and visualize their progress toward reaching those goals. Their employer will often provide them with a device that we will fulfill, whether it’s a Fitbit, Jawbone, or some other type of activity monitor that will track their progress.

We also manage the financial aspects of the program as well, including rewards for engaging, signing up, completing programs, and achieving certain levels of health improvement. We track employee progress, report how they’re doing, notify them when they’ve earned rewards and then we fulfill them. Our primarily fulfillment mechanism is through Amazon.com, where we do real-time rewards through Amazon’s API. The moment participants reach a goal or do something positive for their health that the employer has decided merits a reward, we send an Amazon gift code. They can either bank that or redeem it right away for a prize of their choosing.

 

Are you trying to bring a lot of these functions in house, or are you trying to be a network that helps connect the dots? Is it a best-of-breed strategy or an integrated strategy?

I would say it’s a hybrid of the two. We’re trying to deliver some of our own proprietary programs, products, and services. At the same time, we want to play nicely and integrate with existing vendors, programs, and services.

There are two reasons for this approach. The first reason is because we can’t recreate the wheel. There are certain things we specialize in and certain things we’ll never be the best at. The second reason is we want to be able to plug into what’s already happening and what already exists. We don’t have to displace existing vendors; we can actually work side-by-side with them.

An example might be a health assessment. We’re developing our own health assessment tool that we believe is the next generation of health assessments. It’s engaging, it’s simple, it’s fun, and it gives people some wonderful recommendations for things they can do to improve their health.

At the same time, if we come into an environment where there’s an existing health assessment tool, we’re going to plug into that tool, take in the data, and let that data feed our recommendation engine and populate our platform. We don’t have to push our health assessment on a customer if they have one they already like. It’s the same thing with devices. We have a preferred device vendor that’s white-labeled through ShapeUp that we will offer and fulfill, but if a company wants to use a Jawbone or a Nike+ FuelBand or any other device, we have a strategy for that. We’re going to be agnostic from that respect and let employees pick their device or let the employer choose the device they want to offer to employees.

It’s the same thing on the mobile front. We have a mobile app that helps people engage with our platform. At the same time, we work really well with RunKeeper and the whole host of RunKeeper apps, and we’re looking at other tools we’re going to bring to bear from a mobile perspective. We want to let innovation happen at the dizzying pace that is happening, and we want to connect to that innovation.

 

Are you managing relationships with insurance brokers or carriers?

We sell directly to and through health plans. Our product is distributed, for example, by Aetna, under the name Aetna Health Connections Get Active. We have hundreds of customers that buy the product through Aetna, and Aetna’s distributing it to their clients. It is a really nice channel. It’s a way for a customer to buy something and consolidate their wellness program with their health plan. At the same time, we sell directly to health plans–directly for their members as opposed to their employer customers.

For example, Blue Cross Blue Shield of Michigan is a customer of ours, and they’ve rolled the platform out to their individual members who buy insurance directly from them, as a way to engage them, build loyalty, drive retention, and promote healthier outcomes in the population. We can work with health plans in a variety of different ways, but they’re really the aggregators in the healthcare space. If we want to reach scale, we have to work with health plans. And frankly, they’re finally waking up to the importance of consumer engagement and technology and realizing that in this new world of health exchanges and choice, they have to engage their members. While employers have already figured this out and are engaging employees through wellness programs, health plans are just starting to figure it out as well, and they’re getting turned on to solutions that are really engaging from a consumer’s perspective, like ShapeUp.

 

You were one of the first companies in employee wellness. There are an untold number of companies getting into that space. How do you see the market playing out?

You’re absolutely right. There’s been an exponential increase in activity in this space since we first got into it. What’s going to happen is the best companies and the most innovative ones are going to survive, and they’re going to be the ones that cross the chasm. I’d like to think we recently crossed the chasm where we’re not just working with early adopters and risk takers, but we’re actually working with the early majority that are using social wellness platforms and our unique 2.0 approach to help in wellness engagement.

There’s a whole list of other companies trying to cross the chasm, and the best ones will. Some of them will not get funded because there’s not enough money to go around in the space, and some of them will not get the traction they need from employers, consultants,and health plans. It takes a lot of years to build up credibility in this space. You have to do research and publish outcomes. You have to demonstrate success with customers and show results over multiple years. Some of the companies we’re competing against are absolutely going to have the opportunity to do that, but the majority of them won’t.

We’re excited about the new partners in the space because they’re bringing a lot of fresh ideas, momentum,and attention, and that’s good for all of us. They will become partners we can work with and companies we can learn from by seeing the things they do well and the things they don’t do well. It’s really helping to improve our business. I see incredible opportunity in the health and wellness space, and I think there’s going to be a lot of great success stories.

 

Do you see the market segmenting? For example, you’re serving Fortune 100, 500 and 1,000, companies. Do you also cater to 10-employee start-ups? How about 100-employee companies?

Traditionally, the focus has been on larger companies. That’s where there are dollars, that’s where there are budgets for employee wellness, and that’s where there are wellness directors and wellness managers that are buying products and services, like ShapeUp offers.

What we’re seeing now is that employee wellness is going down market. It’s the middle market, the 500- to 5,000-employee companies, that are starting to mobilize resources and realize it’s not just about healthcare costs. If you’re a fully insured business, you don’t really save any money on healthcare by making employees healthier, but you do increase engagement, productivity and morale. You also drive down absenteeism. We’re starting to see a whole middle market wake up, and frankly, that’s where the majority of employees work, in small and medium-sized businesses. We’re really focusing on this market. We launched a new middle market product earlier this year, and we’ve scaled our platform to reach a 3,000-person company, or even a 300-person company, in a way that meets their needs but is also profitable for us.

 

How far down market have you gone?

I think very small companies are highly social to begin with, and you don’t need a robust wellness program to get your employees engaged. You can get all 10 employees to go for a walk together at lunch, or to do something healthy together. When you start to get above 100 employees and have multiple work sites, that’s when you start to need tools to organize people, collect data, and manage communications and so forth. I would say a wellness platform starts to make sense when companies reach a 100 employees.

 

Why did you as a doctor go to the vendor side?

I got into the business very accidentally, and sometimes I wonder what I was thinking. When I was a medical student, I got very interested in prevention, and particularly interested in how to tackle the obesity epidemic. I started working with my patients on trying to understand why so many of them were failing at reaching their health goals such as eating healthier, increasing their exercise, losing weight, lowering their blood pressure, managing their cholesterol, and keeping their diabetes under control.

What I realized is most people were failing because we kept asking them to do it alone. The entire healthcare system was structured around treating lifestyle change as an individual, personal, and intensely private affair. It turns out that two-thirds of all Americans are overweight or obese, and 90 percent of us don’t exercise on a regular basis. It’s not a private endeavor – it’s a truly social one. All the research shows that obesity and the behaviors that lead to obesity are a social phenomenon. They spread from person to person and they’re part of the culture and the environment. There are a lot of group dynamics at play.

The only way we’re going to solve what’s really a social problem is through a social solution. I started to think about how we can take a social approach to getting people to exercise and lose weight. What I decided to do was take the Weight Watchers model, where you’re leveraging group-based behavior change, accountability, and peer support, and make it fun by combining it with a “Biggest Loser” model, where you’re using games, competitions, and rewards. It took the form of local non-profit project I created called ShapeUp Rhode Island, where teams across Rhode Island would compete every year to see who could lose the most weight and exercise the most. It quickly got the attention of local employers who wanted to roll it out to their employees, and that awakened me to the corporate wellness movement and the impact of rising healthcare costs in the corporate space.

I quickly started to work with those employers as a way to fund the enterprise, and before long, it became a purely corporate wellness program. I ended up getting together with one of my classmates, Dr. Brad Weinberg. We built a robust platform and launched a for-profit company during our second year of medical school. We tried to do both at the same time but realized that was a losing proposition. We actually left med school for two and a half years to raise capital and build the business. We went back to med school and finished our degrees, but in the process, we learned we were really passionate about entrepreneurship. We felt we could have more of an impact on the world by leveraging our skills and scaling up a product and an approach like we had with ShapeUp to affect change across a lot of people.

One of the interesting milestones we just reached is we now have more than one million users registered on our platform. When I think about the number of patients Brad or I could see on a daily basis or across our entire career, we would not get anywhere near a million. We like to think we’re having an impact on a scale much larger than we could as clinicians. We’re also showing the healthcare universe a different way to approach health and wellness and showing it doesn’t have to be a private, personal, and individual affair. It can be social and shared. We can leverage the power of the community to help people change their behavior and sustain that behavior change over a long period of time.

I really feel that’s the missing link in healthcare. We know engagement and behavior change is the only way we’re going to solve the health problems that face this nation. We like to think we’re doing something at the core, at the root of the problem, and that this is what’s going to really change the trajectory we’re on as a country.

 

How long has the company been around? Where is it based? How many employees? Financials?

We were founded eight years ago and are based in Providence, Rhode Island. We have 75 employees, and we’re a profitable company. We work with 40 of the Fortune 500 and we’re growing rapidly. We are currently expanding our team and looking to double its size over the next 24 months.

 

Are you VC-backed?

Yes, we’re venture backed by two Boston-based venture capital firms. We’re currently looking at raising a new round of growth capital to help super charge the business and step on the gas for marketing, sales, and product development.

 

Any final thoughts?

There’s a lot of press and attention being paid to what corporations are doing in the wellness space. Our model is one that can be leveraged across the healthcare ecosystem, whether we’re talking about insurance companies, accountable care organizations, or providers. It can even be rolled out directly to consumers. We’re taking a 2.0 approach and bringing all the lessons we’re learning from Facebook, LinkedIn and Twitter on how to engage people, motivate them, and get them inspired and taking those into the healthcare world. It turns out these social approaches really do work.

I think there’s resistance in the healthcare space because we’re worried about privacy, we’re worried about protecting our patients, and we’re worried about all the constraints that we face. We can take lessons from the consumer world, bring them into the healthcare space and make a great impact. That’s what we’re doing with ShapeUp, and there are a lot of companies that are doing the same thing. I think it’s showing a whole new way to approach healthcare by meeting people where they’re at and figuring out ways to engage them with tools, products, and services from their personal lives. Ultimately, that is what’s going to transform the healthcare system.

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